Friday's Wall Street Journal editorial concerning Massachusetts' demands that health insurers sell policies at a loss ought to give investors a lot of pause about risk in this economy.
It may seem like ancient history now to recall the federal takeovers of Citigroup, AIG and GM. Or the bailouts of Morgan Stanley and Goldman Sachs, as the two investment banks ran for cover to register as commercial banks in order to take Fed injections of funds.
But it is a fact that the federal and state governments are intruding into the private sector to a greater extent than any time except for Nixon's wage and price controls and FDR's massive attempts at socialization of the economy.
Having been refused premium increases to cover losses, three non-profit health insurers in Massachusetts- Blue Cross Blue Shield, Tufts and Fallon Community Health- stopped selling new policies.
In retaliation, the state has demanded that these companies never the less sell loss-making policies in the state.
With actions like this, doesn't it make you just reflexively avoid the health care insurance sector for equity investment? This perfectly illustrates how meddling with private sector companies can so easily chill investor interest in a sector, or businesses in a particular state.
Confidence in capital markets and their operation free of excessive, arbitrary interference from government, is a fragile thing.
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